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Can Westpac sustain earnings momentum through credit uncertainty and strategic transformation? 21 October 2026 08:20 PM NZDT Summarize with AI You are reading a free article with opinions that may differ from the recommendation given by Kalkine in its paid research reports. Become a Kalkine member today to get access to its research reports, in-depth technical and fundamental research. Learn more Highlights * Westpac reported third-quarter statutory net profit of A$1.8 billion, up 3% on the average quarterly result for 1H26. * Net profit excluding notable items increased 2%, while net operating income rose 1%. * Loans and deposits each grew 2% during the quarter, with lending growth across housing, business and institutional portfolios. * Net interest margin remained stable at 1.89%, as higher-rate benefits were offset by competition and deposit-mix effects. * Credit provisions and stressed exposures edged higher, making asset quality and the economic outlook important monitoring points. Earnings Resilience Depends on Margin Discipline and Credit Quality Westpac Banking Corporation (ASX:WBC) is one of Australia's major banks, providing home loans, business and institutional lending, deposit accounts, transaction banking and wealth-related services. Its earnings are shaped by lending and deposit growth, net interest margin, fee income, operating expenses and credit losses. The bank's third-quarter FY26 update showed continued operating momentum, but also highlighted the need to balance growth and transformation investment against a less certain economic environment. Westpac reported unaudited statutory net profit of A$1.8 billion for 3Q26, up 3% on the average quarterly result for the first half of FY26. Net profit excluding notable items also increased 2%, while net operating income rose 1% and pre-provision profit grew 1%. These movements point to modest underlying progress rather than a dramatic acceleration. For investors, the important question is whether the bank can sustain income growth while keeping costs controlled and ensuring credit losses remain manageable as household and business conditions change. Loans increased 2% during the quarter, supported by growth of 4% in business lending, 3% in institutional lending and 2% in housing. Deposits also grew 2%, with transaction and term balances contributing to the increase. Loan growth can support net interest income and strengthen customer relationships, but its quality matters as much as its volume. Banks need to maintain underwriting discipline and ensure loan pricing adequately reflects borrower risk, funding costs and the capital required to support balance-sheet expansion. Net interest margin remained stable at 1.89%. The bank said its core margin was steady, with benefits from the higher interest-rate environment and liquid assets offset by competitive lending conditions, deposit mix and a higher proportion of customers qualifying for savings bonus rates. This illustrates the pressure facing banks as they compete for both borrowers and deposits. Even where lending volumes rise, margin pressure can limit the resulting earnings benefit. Future performance will depend on deposit retention, loan repricing, customer mix and the pace at which funding costs adjust. Westpac continued to manage expenses while investing in its business. Operating expenses excluding notable items increased 1%, reflecting salary and wage growth and investment activity. The bank was pursuing more than A$550 million in productivity savings for FY26 and progressing its UNITE transformation programme, which aims to simplify systems and processes and improve customer experience. The sale of the RAMS mortgage portfolio, completed on 1 August 2026, also reduced operational complexity and the home loan portfolio by A$15.4 billion, while adding 23 basis points to the CET1 capital ratio. These initiatives may improve efficiency and capital flexibility, but their longer-term value depends on implementation, customer outcomes and realised cost savings. Credit quality remains a central issue. Impairment charges were equivalent to 10 basis points of average gross loans in the quarter. Stressed exposures increased by 3 basis points to 1.19% of total committed exposures, while credit impairment provisions stood at A$5.3 billion at 30 June 2026. The bank increased provisions above expected losses under its base-case economic scenario to A$2.0 billion, reflecting a cautious approach to uncertainty. These figures do not by themselves indicate a material deterioration, but they underline the need to monitor borrowers as higher living costs, interest expenses and business pressures affect repayment capacity. Associated Risks Westpac faces competition for mortgages and deposits, changes in interest rates, wholesale funding volatility and the possibility of higher credit losses if households or businesses come under pressure. Margin benefits can be eroded by deposit repricing or aggressive lending competition. Technology and transformation programmes may cost more or take longer than expected, while cyber incidents, operational failures and regulatory requirements can create additional expense. Investors should monitor net interest margin, loan and deposit growth, impairment charges, stressed exposures, operating expenses, capital ratios and progress on productivity initiatives. Bottom Line Westpac's 3Q26 update showed modest profit growth, broad-based lending expansion and a stable net interest margin, supported by continued customer activity. However, rising stressed exposures and a cautious provisioning stance indicate that credit quality remains important as economic uncertainty persists. Sustainable performance will depend on protecting margins, controlling costs, maintaining sound underwriting standards and delivering transformation benefits without weakening customer service. FAQs. Q: What did Westpac report in its 3Q26 update? A: Statutory net profit was A$1.8 billion, up 3% on the average quarterly result for 1H26; net profit excluding notable items rose 2%. Q: Why is net interest margin important? A: It measures the spread between interest earned on loans and other assets and the cost of funding. Small changes can materially affect bank earnings. Q: Which indicators should investors monitor? A: Net interest margin, loan and deposit growth, impairment charges, stressed exposures, operating expenses, capital ratios and delivery of productivity initiatives. Download Free Report - Explore 3 Stock Ideas & Industry Insights Unlock 3 stock ideas and key industry insights in its free report. This information is general in nature and does not consider your personal objectives, financial situation, or needs. It is not financial advice. All investments involve risk - consider independent advice before making any investment decisions. Disclaimer:

ASX retreats as energy shares slump; Nick Scali tanks; Westpac axes jobs. Staff writers Updated October 22, 2026 - 6:01pm,first published October 22, 2026 - 5:28am Article gifting is here Give anyone free access to subscriber-only stories when you subscribe. The Australian sharemarket declined on Thursday, despite a strong lead from Wall Street where strong results from SpaceX and other big companies boosted sentiment. Furniture retailer Nick Scali's shares plummeted after a profit warning. The S&P/ASX 200 fell 38.1 points, or 0.4 per cent, to close at 8793.20, weighed down by energy and mining stocks. Tech stocks advanced, tracking the positive sentiment for the sector in the US. Thursday's market decline followed a volatile session on Wednesday, when the local bourse swung between gains and losses before closing 0.2 per cent higher. Nick Scali dived 15.3 per cent after warning its sales in the December half will be 11 per cent to 14 per cent below last year's as consumers tightened their belts after the federal budget in May. Hit by lower demand amid the cost-of-living crisis and rising interest rates, it expects net profit to fall by as much as 32 per cent to $28 million to $32 million in the period. The profit warning weighed on other retailers, with fellow furniture seller Harvey Norman down 2.9 per cent, while Bunnings and Kmart owner Wesfarmers fell 3.1 per cent and electronics retailer JB Hi-Fi lost 1.7 per cent. The Australian dollar was trading at US70.16¢ late on Thursday after hawkish Reserve Bank comments on Wednesday, which boosted rate hike bets for next month. Expectations of another rate rise as early as next month have been rising after Reserve Bank deputy governor Andrew Hauser said this week that Australia's inflation outlook looked "materially worse" than predicted in August, citing higher oil and technology prices. He warned mortgage holders and businesses the bank is facing "hard choices" in its bid to bring down inflation amid warnings it risks pushing the country into recession. Traders price about a 43 per cent chance of a rate rise at the end of the RBA's two-day meeting on November 3, up from about 30 per cent before Hauser's comments. A 25 basis point rate rise is all but fully priced for February, brought forward from expectations it may occur in May. On the energy front, oil rose again overnight following a deadly attack on a Saudi oil field, raising concerns that escalating hostilities in the Middle East could hit supply even as exports through the Strait of Hormuz have accelerated in recent months. From our partners. West Texas Intermediate climbed towards $US98 a barrel, while Brent jumped above $US110 in post-settlement trading. A drone strike on Saudi Aramco's Shaybah field killed two people, although operations were unaffected. Meanwhile, the US has ordered the departure of some personnel and family members from US embassies in the kingdom. Local energy stocks were down, however. Santos fell 1.3 per cent after its latest production report, while Woodside shed 3.5 per cent. The Big Four banks closed higher. CBA edged up 0.1 per cent, National Australia Bank lifted 0.2 per cent, Westpac moved 0.4 per cent higher, while ANZ Bank rose 1.2 per cent. Westpac is cutting another 140 roles, the latest sign that Australia's weak housing market and an increased use of artificial intelligence technology are biting into the country's workforce. The Sydney-based bank informed the Finance Sector Union of 140 job cuts this week, following a further 102 cuts announced to the union two weeks ago, according to a Westpac spokesperson. Iron ore giant Fortescue fell 4.5 per cent after warning its operations might be affected if the tough pricing negotiations with China's state-backed buyer aren't concluded by year-end. The nation's third-largest miner has become targeted by China's push to force down iron ore prices, putting future revenues from its single biggest market under pressure. Bigger rivals BHP and Rio Tinto, which have been pivoting towards copper to tap demand for the red metal in the AI boom and reduce their reliance on ore, fell 2.4 per cent and 1.5 per cent, respectively. Meanwhile, tech companies continued their relief gains after encouraging earnings from tech and AI companies on Wall Street, which helped boost confidence in the tech trade. Software maker WiseTech rose 3.1 per cent and cloud connections provider Megaport climbed 4.4 per cent. Embattled data centre operator NextDC jumped 7.5 per cent, paring back a fraction of its more than 40 per cent slump on Wednesday when it gave a profit warning over community backlash to extend its major data centre in Melbourne. On Wall Street overnight, the S&P 500 added 0.6 per cent and pulled within 0.8 per cent of its all-time high set earlier this month. The Dow Jones Industrial Average gained 360 points, or 0.7 per cent, and the Nasdaq composite climbed 1.1 per cent. With AP, Bloomberg

Insurance moves: Acenda Life, Arch, PPS. Arch promotes its northern casualty manager to lead the book, Acenda swaps its commercial and people chiefs, and PPS Mutual adds an NSW adviser-facing manager 14 Oct 2026 Arch Insurance Australia has promoted a former Chubb casualty leader with broking experience to run its retail casualty book, Acenda Life has moved its people chief into the chief commercial officer role as its integration enters a new phase, and PPS Mutual has hired an adviser-facing business development manager for New South Wales. Arch Insurance Australia promotes Whitlock to casualty head. Arch Insurance Australia has promoted Andrew Whitlock (pictured, left) to head of casualty, effective immediately, nine months after he joined as northern region casualty underwriting manager from Chubb. The insurer announced the move on October 6. Whitlock is responsible for the casualty team, underwriting strategy and growth of Arch's retail casualty portfolio across Australia. The portfolio spans primary and excess liability placements across a broad risk appetite, with a core focus on products-led risks including manufacturing, wholesale, retail, importing and exporting. Based in Sydney, he reports to managing director Dominic Brannigan and works closely with James Mecham, deputy chief underwriting officer for long tail lines and head of general casualty at Arch Insurance International. His appointment brings a broking background to the job. In the northern region, Whitlock ran underwriting and broker relationships across New South Wales, the ACT and Queensland, Insurance Business reported when he joined. Before Arch he was a casualty segment leader in Chubb's major accounts division in Australia, and he previously held broking roles at Brown & Brown in London. Brannigan said Whitlock's contribution to the northern region's growth had been significant, and that the business expects him to strengthen its casualty offering across Australia while continuing to deliver strong support to brokers. Mecham said the appointment strengthens alignment between Arch's Australian retail operations and its wholesale team in the London Market, and described casualty as a core line of business for the group. Acenda Life names chief commercial officer and people chief. Acenda Life has appointed Ross Miller (pictured, centre) as chief commercial officer, responsible for its Australian commercial teams across insurance, wealth and retirement solutions. Sean McCormack is stepping down from the role. The announcement came on October 12. Miller joined Acenda in February as group chief people and culture officer after more than 25 years at Westpac Group. His roles there included chief customer and engagement officer for consumer and business banking, general manager of St. George Bank, and group general manager of human resources for Westpac's Australian financial services businesses. In the customer and engagement role he led channel and distribution delivery across branch, virtual, home lending, Indigenous banking, and small business and SME operations serving more than 10 million customers. Lisa Green succeeds him as group chief people and culture officer, effective immediately. She has more than 30 years of human resources experience across Australia and the United States, including senior roles at Citigroup and J.P. Morgan in Sydney and New York, group executive of human resources at ASX Limited and, most recently, chief people and culture officer at oOh!media. McCormack originally joined MLC Life Insurance in 2009 and rejoined Acenda Life in 2025 to lead the commercial division through the early stages of the integration of Acenda Life and Resolution Life Australasia. Group chief executive Chris de Bruin said McCormack had led the team to important market wins, supported the integration of its people and helped establish the cultural foundations of the Melbourne office. The Acenda Group was formed in October 2025 after Nippon Life's global acquisition of Resolution Life Group. It brings together Acenda Life, Resolution Life Australasia and Asteron Life New Zealand and supports more than two million customers across Australia and New Zealand. De Bruin said the group is "making strong progress towards a simpler, digitally enabled operating model" almost a year into its Australian integration, and that the appointments bring together the commercial, customer and people capabilities for its next phase while keeping disciplined execution for customers, advisers and partners. He pointed to Miller's understanding of customer and distribution operations as important as the group sharpens its commercial strategy. The release gives no detail on any changes to adviser-facing teams or products. PPS Mutual adds New South Wales business development manager. PPS Mutual has appointed Maria Repac (pictured, right) as business development manager for New South Wales, reporting to Sabrina Sequeira-Walmsley, state manager for New South Wales and the ACT. The insurer announced the hire on October 7. Repac will help expand its accredited adviser network across the state by deepening existing partnerships and building relationships with new advisers. Sequeira-Walmsley said the appointment reflects growing adviser demand in the state, with advisers seeing more complex needs from professional clients and wanting a partner who understands that market. She said Repac's experience across underwriting, claims and operations gives her a practical understanding of how to support advisers. Repac has more than two decades of experience across life insurance and financial services. She joins from MetLife Australia, where she began in the underwriting team before moving into business development in 2022 as a business development consultant, working with advisers to grow their risk businesses and reconnect with advisers who had previously engaged. Before MetLife she was operations manager at claims management software business ANCIS and an HR adviser at Munich Re. She also spent almost 14 years at Commonwealth Bank and CommInsure, including as a specialist claims support analyst on complex and long-term claims, and holds a Diploma of Financial Planning. Insurance Business reported in May that PPS Mutual appointed Hasib Qayumi as its New South Wales business development manager from May 4. The release does not say whether Repac's role is additional to that post or replaces it. PPS Mutual's life insurance products are sold exclusively through accredited independent financial advisers and designed for professional clients such as doctors, lawyers and accountants. The insurer said its annual lapse rate of 6.4% compares with an industry average of 14.3%, a comparison it sources to the NMG Retail Advice Channel Risk Distribution Monitor as of June 30, 2026, and that Adviser Ratings has named it Best Retail Life Insurer for three consecutive years. Insurance Business reported separately that its profit-share pool reached $19.6 million at the end of 2025-26.